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A) ABC Ltd. is setting the price for a new product, using cost-plus pricing. Variable costs...

A) ABC Ltd. is setting the price for a new product, using cost-plus pricing. Variable costs of production for this product are estimated to be $1,000 per unit, and overheads of $200 per unit will be allocated to the product. The company wants to achieve a 50% profit margin on costs (50% markup). What selling price should ABC set?

B) In Part A , ABC Ltd. assumed that sales volume for the new product would be 10,000 units in the first year. In fact, ABC manages to achieve sales        volume of 15,000 units on the product. As a result, does it achieve a higher or a lower profit margin than expected on this product?
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